12 Expert Financial Planning Tips For 2017

As 2016 winds down, the holiday season approaches and a new government administration gears up to take office, many Americans are struggling to figure out their goals and finances for next year. Unfortunately, many people will not achieve their financial goals next year or even get started, leaving their future financial security up in the air. So decided to reach out to the professors at The American College of Financial Services, a nonprofit, accredited college in Bryn Mawr, Pennsylvania, for some tips on improving your financial situation in 2017. These professors are the experts who teach the experts, educating and interacting with tens of thousands of financial advisors each and every year. Let’s look at 12 practical tips from the leading financial planning thought leaders and professors that can help you take your 2017 financial planning to the next level, and put you on the right path to a more financially secure future.

Tip # 1- Maximize Your Retirement Savings.

“There are three secrets to maximizing retirement savings. The first is to put savings on autopilot—salary deferrals to 401(k) plans, automatic monthly withdrawals from a checking account, paying down a mortgage. The second secret is to fully utilize tax-advantaged retirement vehicles like IRAs and Roth IRAs. The third secret— forget that you have this money!”

-David Littell, JD, ChFC®, Professor of Retirement Income Planning

The American College of Financial Services

Tip # 2 – Reallocate Your Investments.

“With the recent surge in equity values, remember that long-term performance, particularly for the portfolios of retirees, is better when the stock allocation is returned to the target allocation on a regular basis. In simple words, with the elevated values of equities we are currently seeing, it is a good time to lighten the equity load and add to the bond allocation.”

-Walt Woerheide, PhD, ChFC®, CFP®, RFC®, Professor of Investments

The American College of Financial Services

Tip # 3 – Don’t Forget Your Estate Plan.

“Comprehensive financial planning includes estate planning and emergency planning for families. A lot of attention is given to savings for emergencies. The typical recommendation is for six months of compensation saved in a liquid account. But what about premature death planning? Will there be assets to take care of final expenses and liquidity to provide for family needs? The time frame of these needs will indicate the amount of funds necessary and the amount of those funds that need to be liquid. There are personal savings, employee benefits, and life insurance proceeds that may be available to provide for the needs of the family. But are these funds structured properly? Often they are not. The client’s will, personal asset titling, and beneficiary designations all need to be reviewed to ensure that family needs will be matched by both the amount of funds available and how the funds are made available.”

-Ted Kurlowicz, JD, LLM, CAP®, ChFC®, CLU®, Professor of Taxation

The American College of Financial Services

Tip # 4 – Invest For The Long Term.

“Success in investments is a marathon and not a sprint. Develop an investment strategy and stick with it no matter what the conditions in the market. Since 1926, a diversified portfolio of large capitalization stocks has earned, on average, 10 percent compounded annually. Corporate and government bonds have returned approximately 6 percent. Woody Allen said 80 percent of success is showing up. Success in the stock market is largely about showing up and sticking to a long term plan.”

-Robert R. Johnson, PhD, CFA®, CAIA®, President and CEO

The American College of Financial Services

Tip # 5 – Capital Ownership Is Key.

“Strive to be the owner of capital. Appreciation is never taxed until you decide to be taxed. This means you have control. Not only do you have control, but those gains are preferentially taxed at long-term capital gains tax rates. Furthermore, the returns of capital qualified dividends and long-term capital gains are also preferentially taxed. Whenever one can afford to be compensated with stock rather than with ordinary income, there will be a greater long-term advantage. In many ways, it’s not how much you get paid, but how you get paid.”

-Christopher Woehrle, JD, LLM (Tax), Professor of Taxation

The American College of Financial Services

Tip # 6 – Manage Your Debt To Stay Out Of Debt.

“Without a strategic debt management plan, you will likely continue to accrue debt which puts you further behind and makes it harder to escape. Debt management includes strategically paying down the most expensive debt first, like credit card debt, then personal loans, then student loans, and then housing debt. However, debt management is also just as much about avoiding future debt and looking for areas to cut back spending or at least, spend smarter. If you find yourself buying coffee every day or eating out at lunch, think about packing lunches or buying a coffee machine, which could save you money in the long term.”

-Ajamu Loving, PhD, Professor of Finance

The American College of Financial Services

Tip # 7 – Talk With Loved Ones About Money.

“Often, couples hide financial secrets from their partners, which can negatively impact a relationship. Take some time to talk to a significant other about your financial goals and what you want for the future. Take some time to build a shared vision of what your future looks like. For parents, take time to teach your children about money. Children learn about money whether we deliberately teach them or not, so be conscious about what money messages your children are getting. Even a simple conversation can go a long way.”

-Benjamin Cummings, PhD, CFP®, Professor of Behavioral Finance

The American College of Financial Services

Tip # 8 – Review Insurance Coverages.

“Review your insurance coverages on a regular basis to ensure that the amounts of coverage are still consistent with your original needs and intent. This means reviewing life insurance, health insurance, disability insurance, car insurance, and homeowners insurance. You also might find out that you need some additional insurance coverage in the way of an umbrella policy. Insurance is not the sexiest of financial planning discussions but it’s crucial to living a financially secure life. Where life insurance is involved, be sure to reevaluate your beneficiary designations and coverage amounts after major life events.”

-C.W. Copeland, PhD, Professor of Insurance

The American College of Financial Services

Tip # 9 – Do Something For Your Kids.

“Think about what small thing you can do in 2017 that will have a huge impact for your children 10 or 15 years from now. Maybe it’s funding a 529 account for college or the new 529 ABLE accounts for children with disabilities. Perhaps it’s establishing a trust or funding a small investment account so they have a safety net after college. Small acts today can be lifesavers for your kids when they become adults. Plus, it may avoid the likelihood of having them move into your basement when they’re 30.”

-Adam Beck, JD, Professor of Health Insurance

The American College of Financial Services

Tip # 10 – Education Re-Financing.

“You might find yourself in that interesting place where you are still paying off your college loans and saving for your kids. Right now is a great time to consolidate or refinance your school loans. Interest rates will likely continue rising in 2017 and direct loans are variable. Grab a lower interest rate now. Consolidated loans qualify for repayment plans such as PAYE and REPAYE. These plans are income sensitive and will help you manage payments in younger earning years. Additionally, think about the future and start saving in 529 plans, but don’t forget to shop around as not all 529 plans are created equal. The Nevada and Ohio plans are popular, but always check your own state’s plan to see if you are eligible for any special income tax benefits.”

-Craig Lemoine, PhD, CFP®, Professor of Financial Planning

The American College of Financial Services

Tip # 11 – Maximize Flexible Spending Accounts.

“Take full advantage of flexible spending accounts (FSAs) that your employer may offer for out-of-pocket medical expenses and dependent care costs. The 2017 maximum FSA contribution is $2,600 for healthcare FSA and $5,000 for dependent care FSA. The tax savings can be substantial, because monies deferred into FSAs avoid all taxes—federal, state, local, and FICA. In the right situation, an individual could save thousands of dollars a year in tax savings by maximizing FSA contributions. But remember, there is a use-it-or-lose-it stipulation with FSAs. Unused monies at the end of the year are forfeited. So, it is important to accurately estimate the annual contributions.”

-Kirk Okumura, MSFS, ChFC®, Director of the FSCP® Program

The American College of Financial Services

Tip # 12 – Develop A Retirement Risk Management Strategy.

“Retirement income planning is different from saving and accumulating wealth for retirement. The risks are different. Retirees need a plan to manage market volatility, their unknown longevity, and a variety of spending surprises such as a need for long-term care. Planning with only investments or only insurance is rarely the most efficient way to develop a plan that can manage these varying risks. Now is a good time to start reading more about retirement income to develop an integrated and cost-effective plan for managing all the retirement risks.”

-Wade Pfau, PhD, CFA® Professor of Retirement Income Planning

The American College of Financial Services

Remember a few key points about a successful financial year. There is power to planning, so get a plan set up. Automate your savings and investment strategy whenever possible. Take time to envision your financial future. Review your emergency fund, insurance coverages, and investments this year, making sure they still meet your goals. Lastly, it is okay to get help. Seek out and find a quality financial planning professional with solid recommendations and recognized credentials like the CFP®, ChFC®, CLU®, CFA®, or RICP® to help you finalize your financial planning for 2017.

Follow me on Twitter at @RetirementRisks, check out my retirement book - Rewirement on Amazon here, or my website at HopkinsRetirement.com or my research at www.carsonwealth.com

I am the Director of Retirement Research at Carson Wealth. I am also an adjunct professor at the American College of Financial Services where I helped co-create the Retirement Income Certified Professional Designation (RICP®). I’ve written about, and published, a variety of...